Business Guide Lithuania 2016

Business Guide Lithuania 2016 General, tax and legal information for foreign investors Table of Contents General information 2 Facts and figures. Politics. Economic environment 6 Key economic indicators. Attractive sectors. Regional and urban economic overview and trends. Setting up a business 10 Ease of doing business. Types of entities. Accounting and audit requirements. Investment incentives 12 Investment financing. Legal framework. Double taxation treaties. Investment in real estate and land. Investment protection and guarantees. Labour 16 Conclusion of an employment agreement. Working conditions. State social security issues. New labour regulations. Immigration & permits 18 EU citizens. Non-EU citizens. The tax system 20 Corporate income tax. Withholding tax. Value added tax. Personal income tax. Social security. Other taxes. Useful links 31 Exhibition and Conference Management. Transport and Communications. State Institutions. Largest Cities. PwC 32 Tax services. Legal services. Accounting services. Advisory services. Assurance services. PwC’s Academy. Contacts. © 2016 PricewaterhouseCoopers UAB. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © Judita Grigelytė (vz.lt), photograph on the cover. © Vladimiras Ivanovas (vz.lt), photograph on page 25. Country Managing Partner’s Foreword It’s a great pleasure for me to present for establishing the shared service the Business Guide of Lithuania 2016. centers and outsourcing across the The Guide is a useful starting point CEE region, and Kaunas – the second for the future individual or corporate largest city in Lithuania – was award- investors in the Lithuanian market. ed as an emerging city of the year This edition provides answers to the among all the CEE countries. most common questions that the We’re proud to share our insights to investors may have: from business make your first steps in the Lithua set-up to the most relevant upcoming nian market as easy as possible. changes in the employment regula- We’re here to help you with a full tions. Our team at PwC Lithuania has range of business, tax and legal also prepared an overview of the local issues. Our people have extensive economic environment, legal require- expert knowledge and professional ments, educational advantages and experience, and they are ready to Rimvydas Jogėla governmental incentives for investing offer professional services tailored Managing Partner in Lithuania. to the needs of your business. for PwC Lithuania I’m glad that despite recent geopoliti- cal events, Lithuania’s economy has remained resilient by shifting its focus on new overseas markets. Lithuania’s economy is expected to perform even better in 2016 due to growing investments in the engineering, biotechnology and IT industries. For this reason it is not accidentally that in 2015 Vilnius – the capital of Lithuania – was elected as the best destination Business Guide Lithuania 2016 1 General information Facts and figures Extending to 65,300 sq. km, Lithua nia is a larger country than Belgium, Geography Denmark, the Netherlands or Swit- The Republic of Lithuania is situated in zerland. Lithuania has around 99 km Northern Europe on the south-eastern of sandy coastline devoted to a com- shore of the Baltic Sea. It is the largest bination of leisure and conservation. of the three Baltic States, the other two Lithuania has an ice-free port in being Latvia and Estonia. Lithuania Klaipėda, which is the most impor- shares its borders with Latvia in the tant and biggest Lithuanian transport north (558 km), Belarus in the south hub, connecting sea, land and railway east (653 km), Poland and the Kalinin- routes from East to West. grad Region of the Russian Federation The climate is midway between mari- in the southwest (104 km and 249 km, time and continental. In January the respectively). To the west of the Baltic average daytime temperature is -3°C Sea lie Sweden and Denmark. (27°F), rising in July to +20°C (68°F). Country facts Estonia Capital Vilnius Latvia Area 65,300 km² Lithua nia Population 2.9 million Language Lithuanian Dominant languages English, Russian, German, Polish Currency Euro (EUR) Source: Statistics Lithuania 2 Business Guide Lithuania 2016 Vilnius Old Town is a UNESCO World Heritage Site. Population and language The population of Lithuania is 2.9 million. Some 86.7% of the population are ethnic Lithuanians, 5.6% are Poles, 4.8% are Russians, and 2.9% – others. Lithuania is the largest of the three Baltic States, but globally it is a small country. Its capital and the largest city is Vilnius with a population of 543 Lithuania is ranked as the most thousand. The second and the third largest cities are Kaunas and Klaipėda favourable country in the EU with a population of 299 thousand to start a new business. and 155 thousand, respectively. The official and most commonly Vilnius is among 5 least expensive spoken language is Lithuanian. It is one of only two living languages EU capital cities to live in. (the other one being Latvian) of the Baltic branch of the Indo-European language family. About 92% of the population speak one foreign language (English, Russian, German or Polish) and more than 50% speak two foreign languages. Time, weights and measures 93% Lithuania uses Eastern European Time, of all population which is two hours ahead of Green- have secondary wich Mean Time (GMT+2 hours). Every year, between March and or higher September, Lithuania introduces Day- education light Saving Time (GMT+3 hours). Lithuania uses the metric system of 50% weights and measures and the Celsius of all students temperature scale. are studying in Codes the fields related The international extension code for to services Lithuania is 00 370. industry The country code used in the Internet domain names is .lt. Business Guide Lithuania 2016 3 Politics • According to the Constitution of the Republic of Lithuania (adopted in 1992), Lithuania is an independ- ent democratic parliamentary republic. • The supreme legislative power is held by the Seimas (Parliament), consisting of 141 members elected for a term of four years on the basis of universal, equal and direct suffrage and by secret ballot. • The President of Lithuania is • Lithuania has 60 municipalities elected for a fiveyear term on governed by mayors which starting the basis of universal, equal and from 2015 are directly elected for direct suffrage and by secret ballot. four-year term. The President represents the state • Lithuania joined NATO on 29 of Lithuania and performs the func- March 2004. On 1 May 2004, tions prescribed to him/her by the Lithuania became a full member Constitution and other laws. Cur- of the European Union, and joined rently, the President of Lithuania is the Schengen Area on 21 Decem- Ms Dalia Grybauskaitė, who is the ber 2007. first female president in the Lithua • Lithuania was the first of the three nian history. She was re-elected for Baltic States to hold the Presidency the second term in 2014. of the Council of the European • The supreme executive power rests Union (1 July 2013 – 31 December with the Prime Minister who is 2013) since joining the European appointed by the President and the Union. Parliament. Currently, the posi- • In 2013, Lithuania was elected to tion of Prime Minister is held by the United Nations Security Coun- Mr Algirdas Butkevičius, the leader cil. Lithuania was the first country of the Social Democratic Party of from the Baltic States to be elected Lithuania. to such post. • In June 2015, the Lithuanian delegation received an official invitation to start accession process to the Organization for Economic Cooperation and Development Parliamentary elections will be held (OECD). The Lithuanian authori- ties will proceed with an intense in Lithuania in October 2016. technical accession process, which is expected to be completed in about two years. Lithuania’s court system Supreme Supreme Administrative Constitutional Court Court Court Court of appeals 5 regional administrative courts 5 regional courts 49 district courts 4 Business Guide Lithuania 2016 Business Guide Lithuania 2016 5 Economic environment Key economic indicators Economic indicators show that during the past five years Lithuania’s economy has kept growing. As a result, in 2014 Lithuania succeeded in meeting the EU criteria for the adoption of the euro, and its national currency (the litas) was replaced by the euro on 1 January 2015. 2.9% Booming shared service centers GDP growth In 2015, Vilnius was elected as the 1.7% in 2016* best destination for establishing GDP growth shared service centres and outsourc- in 2015* ing across the CEE region**. Vilnius is attracting higher added value jobs such as business analytics, anti- money laundering, asset management support, IT development. More and Lithuania’s economy is further recovering more shared service centres choose Lithuania as their destination due to highly skilled well-educated profes- sionals that are able to speak sev- The main macroeconomic indicators for 2011-2016 eral foreign languages, a world-class infrastructure and a good location. 2011 2012 2013 2014 2015* 2016* Currently, there are 54 shared service Nominal GDP (EUR billion) 31.2 33.3 35.0 36.4 37.5 38.1 centres in Lithuania that provide GDP growth rate, % 6.1 3.8 3.3 3.0 1.7 2.9 worldwide high-quality services: Average annual inflation, % 4.1 3.2 1.2 0.2 -0.6 1.4 24% of these centres provide finance Unemployment rate, % 15.4 13.4 11.8 10.7 9.4 9.0 and accounting services, and 22% of them operate in IT sector. * Forecast ** Source: www.ceeoutsourcingawards.com Foreign direct Sweden, 3,175 26.3% investments Netherlands, 1,274 10.6% (accumulated as at the end Germany, 1,116 9.2% of 2014, EUR million) Norway, 803 6.7% Poland, 713 5.9% Cyprus, 663 5.5% Finland, 634 5.3% Estonia, 579 4.8% Denmark, 539 4.5% Other countries, 2,583 21.4% 6 Business Guide Lithuania 2016 Lithuania’s biotechnology sector has in Lithuania.

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